Reports in recent days about Bitcoin sales by German authorities are not entirely accurate. The assets are being sold by the government of the federal state of Saxony, which does not have the ability to hold the assets, writes CoinDesk.
In January, the regional Criminal Police Department seized 49,857 BTC from the administrators of the pirated movie site Movie2k.
On June 19, a wallet controlled by the German Federal Criminal Police Office (BKA) began moving cryptocurrency to trading platforms, including centralized exchanges Kraken, Bitstamp and Coinbase.
At the time of writing, the address contains 23,964 BTC worth $1.42 billion.
Sales of digital gold caused a nervous reaction in the crypto community, as well as criticism in the Bundestag.
However, what is happening is not a failed investment strategy, but a standard procedure applied to confiscated funds, says Lennart Ante, co-founder and CEO of Blockchain Research Lab.
“Seized assets are always liquidated within a certain period. This is a normal business process, although on a larger scale than usual,” he said.
The reason why the bitcoins are stored in the BKA wallet and not the Saxon authorities is likely because the federal agency was involved in the investigation and has the technical skills to handle such a volume of cryptocurrency, the expert suggested.
At the same time, the BKA does not act independently, but solely on the instructions of the government of the jurisdiction.
In most cases, confiscated assets can be transferred or sold with proceeds to the state budget by court decision. But regions can initiate emergency sales, for example, if there are risks of rapid depreciation or storage difficulties, Ante explained.
“In the case of Bitcoin, you can talk about this, at least from a volatility point of view,” he added.
It is likely that the remaining coins in the BKA wallet will be sold in the near future. However, experts noticed that in recent days the exchanges returned 5366 BTC to the address. Presumably, the platforms were unable to sell such a volume of cryptocurrency at the target price.
Let us remind you that Bloomberg linked the liquidation of bitcoins by the BKA wallet with a drop in quotations below the psychological support of $60,000 in early July.